Inside Track: Ross’s brutal shake-up could prove painful for taxpayers

 
Mark Kleinman
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ROSS’S Brutal Shake-up – come next month, that will be the most appropriate use of the initials of Britain’s most troubled lender.

After Monday’s kitchen and bathroom sinking all rolled into one, it’s not difficult to see why.

McEwan’s predecessor as chief executive of Royal Bank of Scotland (RBS), Stephen Hester, was fond of describing the legacy issues exploding throughout his tenure as landmines. Plenty more munitions await the new boss.

The near-50 per cent capital shortfall outlined by McEwan this week (against the eventual fully-loaded Basel-III core-tier one target) emphasises the need for urgent action. So the new boss should launch an immediate auction of Citizens, the US retail bank, to weigh up whether a sale might generate more value than a flotation.

And he should be a Ruthless Boss on Savings, as people close to Project Cook, his strategic review, suggest he will be. Some insiders believe as much as 70 per cent of the bank’s remaining markets division could be closed or sold.

That would probably please George Osborne, since it would make RBS’s 2014 bonus pool announced in February next year much smaller.

It would also have the inevitable consequence of permanently impairing the value of the bank’s shares, making it less likely that the government will ever recover the £45.5bn pumped into it in 2008.

Increasingly, that looks to be a calculation that the chancellor is resigned to accepting. But for taxpayers, it’s just Really Bloody Sad.

CAMERON PLEDGES PRO-BUSINESS STANCE
At a private dinner in late November, the chairmen of Barclays, TalkTalk, Tesco and others discussed with Ed Miliband the Labour Party’s attitude to big business in the wake of his conference speech vow to impose a 20-month energy price freeze.

There was not a convivial atmosphere, according to one of those present. “His hostility was barely disguised,” the attendee said.

At last week’s World Economic Forum in Davos, the message from David Cameron and George Osborne could hardly have been more different.

The Prime Minister told a meeting of executives including Marc Bolland, chief executive of Marks & Spencer, and David Sproul of Deloitte that senior conservatives would not be guilty of wanton business-bashing in the run-up to the general election.

That was a welcome attempt to stake out some clear ground between himself and Labour. It was a pledge made privately, but Cameron should prepare to be held to account for it in public.

UNILEVER SET TO LOSE ON SLIMFAST SALE
What with January being a time for attempting to remove the traditional excesses of the festive season, it is appropriate that Unilever’s reshaping is being dubbed internally as Project Half.

For Paul Polman, the Anglo-Dutch consumer goods giant’s chief executive, accelerating that overhaul is proving a painstaking task. The veracity of recent rumours that there is an activist investor sitting on the share register below the disclosure threshold, who Polman is trying to keep at bay, is unclear.

Unilever’s recent performance and focus on slashing its product base suggests that it is already doing many of the things an activist might urge.

Polman is being rightly unemotional about the disposal of peripheral brands such as SlimFast, which I understand JP Morgan has just been awarded the task of selling. Others will follow. As bankers wait to gorge themselves on a fresh M&A feast, it’s also worth reflecting that the pre-Polman Unilever paid not far short of double for SlimFast what analysts now expect it to reap from a sale. That is not the kind of pound-shedding investors are fond of.

Mark Kleinman is the City editor of Sky News @MarkKleinmanSky